Despite the overwhelming sense that relations between Syria and the West are moving forward, ongoing investigations into the country’s alleged nuclear programme will raise some concerns. Without greater cooperation from Syria, we believe that the nuclear issue could become a stumbling block in its negotiations with the US. The reported discovery of traces of uranium at a second Syrian site by the International Atomic Energy Association (IAEA) provides an illustration of the numerous obstacles that still remain to the resumption of full and friendly relations between Syria, the US and the wider international community.

Other obstacles preventing closer ties to the West include Syria’s strained relationship with Israel and its support of Iran, Hamas and Hizbullah. Binyamin Netanyahu, Israel's Prime Minister, had declared himself hostile to the return of the Golan Heights to Syria – one of Damascus's key demands of the regional peace process – but in May said that Israel was ready to engage in talks with Syria without preconditions. For its part, Syria reiterated its willingness to resume talks, but later reversed the sentiment, declaring that Israel was no ‘partner for peace’. Meanwhile, Syria’s support of Iran, Hamas and Hizbullah, while popular domestically, is straining relations with the West. Washington has also called on Syria to take action against al-Qaeda fighters entering Iraq from its territory.

According to our latest macroeconomic forecasting activity, Syria should narrowly avoid a full-year GDP contraction, although negative developments later in the year could push our 0.4% growth forecast back into negative territory. From 2010 onwards, we are forecasting a fairly robust recovery, driven by a pickup in exports and consumer spending. Our forecasts are based on the assumption of greater opening of the economy to private sector activity and an improvement in political relations with the West (facilitating trade flows).

In the last quarter, we introduced an innovative ratings system entitled the City Terrorism Rating (CTR).

The CTR provides an at-a-glance assessment of the risk of a terrorist attack in a given city by weighting a number of significant measures. At present we assess the CTR for Damascus at 90.0, rating equal second with Dubai and Abu Dhabi, behind Tripoli, among the Middle East Region’s 23 rated cities. The CTR is based on BMI’s detailed Terrorism Rating (TR) for the country taken as a whole, and an assessment of the prevalence and threat of terrorism for the city in question. This latter assessment takes into account the frequency of past attacks, whether the city is a target for terrorist activity, and the likely extent of possible terrorist attacks.